Before sitting down at the bargaining table, it’s vital that buyers are able to quickly estimate what a fair final price would be, accounting for negotiations, dealer profit and all mandatory car fees. To do that, consumers don’t need car sales training – they just need to ask for an itemized car quote and then go through it with a fine toothed comb. These quotes vary between dealerships, and when understood well, can afford the purchaser extra bargaining power. Here’s what to look for in a detailed quote:
MSRP and Dealer Cost
The MSRP (Manufacturer’s Suggested Retail Price) is otherwise known as the car sticker price. It’s a price control or guideline set by the manufacturer – and dealers will often highlight how much lower their asking price is than the MSRP. But buyers shouldn’t be sidelined by these discount “illusions,” but rather keep their focus on the invoice price. After all, the dealer has already factored in their own expenses: cost of buying from the manufacturer, shipping, sale prep, and a mark-up to ensure profitability.
When you’re haggling, be sure to allow the dealer between three and seven percent of the invoice price – they won’t sell the car for less than what they paid for it or without a reasonable profit.
Mandatory Fees and Driveaway Price
Some additional expenditures that add to your car quote can’t be negotiated. These include taxes, transport costs and government fees. However, if you’re financing the vehicle the dealer may attempt to add a mark-up in the monthly fee. Look closely at the term length, interest rate, and monthly payment when calculating your final price. Also, don’t forget to deduct any dealer rebates and incentives when adding up your total costs – and of course, add the applicable sales taxes.
Trade-ins and Extras
Many new car deals involve the consumer trading in an existing older vehicle. Often the dealer will offer a very low estimate of the trade-in’s worth, which consumers typically accept without haggling. Have a professional with auto technician training inspect your old car and provide a fair appraisal of its value, prior to heading to the dealership. This way, you’ll have some negotiating power when it comes to finalizing the cost of your new vehicle. And finally, beware the expensive extras. Dealers often score their highest profits from add-ons with inflated prices like an extended warranty, rust-proofing, and paint sealant. Being able to understand a car quote and set a reasonable budget for yourself will help you determine whether these extras are really worth the price.
What do you consider the most important part of any new car negotiation?
